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How Green Transformation Supports Development in Africa
As the world faces increasingly urgent climate deadlines, African policymakers must move beyond the comforting illusion that merely increasing renewable energy production will meet global emissions reduction targets. In reality, a climate strategy focused solely on green energy, while neglecting development, risks achieving climate gains without delivering developmental returns.
While Africa’s greenhouse gas emissions remain low on average, the continent is facing severe economic pressures and debts that could hinder its ability to decarbonize and build resilience. Therefore, any credible climate strategy must integrate debt relief with low-carbon development aimed at growth.
These ideas are central to the recent report by the Africa Expert Panel, established under South Africa’s G20 presidency to explore ways to direct investments that support broad-based sustainable development. The report calls for coordinated debt relief and urges G20 leaders to mobilize public and private capital to unleash African creativity.
Despite Africa’s enormous renewable energy potential, the pace and scale of the continent’s transition to green energy will ultimately depend on the fundamental economic realities surrounding its national economies. The continent already boasts nearly 34 gigawatts of installed hydropower capacity, even before major projects like the Grand Ethiopian Renaissance Dam, which has a capacity of 6.5 gigawatts, come online. Its solar potential stands at an extraordinary 7,900 gigawatts, with installed capacity growing at an annual rate of 54% between 2011 and 2020. Wind resources are estimated at around 461 gigawatts of technical potential, while the East African Rift alone has nearly 15 gigawatts of untapped geothermal energy resources.
However, the real challenge lies not in counting the number of green electrons Africa can produce, but in ensuring that clean energy investments help African countries achieve their developmental goals. For this reason, policymakers need to focus on several key issues.
Understanding the root causes of the continent’s developmental problems must come first. Most sub-Saharan African countries remain highly dependent on exporting commodities and raw materials, a development path that has entrenched structural imbalances and constrained the growth of other sectors.
Nigeria exemplifies this starkly. Before the discovery of oil, the country had a vibrant agricultural sector. However, as oil revenues surged, agriculture rapidly lost its prominence, with exports declining by 17% at the peak of the oil boom in the 1970s. This over-reliance on a single commodity—a classic example of the “Dutch disease”—has made the Nigerian economy highly vulnerable to price shocks and market volatility.
Secondly, scaling up climate-aligned investments requires a much clearer picture of the continent’s debt landscape: its size, composition, and how to stabilize it. While additional financing will be necessary, it is crucial that any new borrowing is linked to improving productivity and economic resilience.
In the short term, this necessitates bolstering sectors like agriculture and tourism while simultaneously laying the groundwork for a shift towards higher-value goods and services. For instance, Ghana and Côte d’Ivoire produce nearly half of the world’s cocoa, but limited investment in research, development, and processing means that most of the value continues to flow elsewhere, making the economies of both countries susceptible to market fluctuations and limiting diversification opportunities.
Thirdly, economies like South Africa need to enhance their competitiveness as policies such as the European Union’s Carbon Border Adjustment Mechanism come into effect. These measures will significantly impact carbon-intensive sectors, emphasizing the need to move away from the current African model that preaches “grow now, clean up later.” For an energy transition to translate into sustainable economic growth, decarbonization must be paired with real manufacturing and diversification.
Fourthly, misallocation of capital will be particularly costly for debt-laden countries at a time when borrowing costs are soaring across much of Africa. This makes it essential to focus on green growth initiatives that deliver tangible productivity gains and economic opportunities.
At the same time, affordable, reliable electricity remains a critical factor in unlocking Africa’s productive potential and integrating its rapidly urbanizing youth into the global economy. For example, companies operating in Senegal’s Diamniadio Special Economic Zone cite rising electricity costs as a key factor undermining their competitiveness.
Finally, African policymakers need a long-term vision for what their economies should look like in two or three decades. Climate solutions must not only focus on emissions reductions but also create pathways for countries to climb the value chain and engage in developing future technologies.
The reality is that 21st-century economies are economies of ideas, where countries compete to develop solutions to national, regional, and global challenges. If climate investments are managed correctly, they could help foster dynamic, creativity-driven African economies. Yet, this requires a coherent long-term vision for the economic trajectory the continent aspires toward.
